Challenges of reforming international mobile roaming rates

My ongoing review of the Trans-Pacific Partnership (TPP) trade agreement, a 6000-page document that remains under Congressional review, previously concluded that its e-commerce provisions needed better coordination with Europe to achieve its goal of a single global digital marketplace. The European model is not as useful a reference point when considering telecommunications, however. The thorny issue of international mobile roaming charges has not been handled adeptly by the European Union. To its credit, the TPP is the first-ever attempt to deal with these charges through a trade agreement.

In order to achieve a necessary level of seamlessness for those crossing national borders on a regular basis, mobile carriers have established the technical capability for users in one country to use their mobile device in another. In turn, this feature enhances the overall value to users of mobile voice, data, and video communications.

But this capability comes with an economic incentive for mobile carriers to raise profits by adding expensive roaming charges to an otherwise low-cost service. These charges are akin to the pot of gold that the global airline industry has discovered through rolling out checked baggage fees over the past decade.

Given the geography of Europe, the cost of international roaming has plagued the EU for years, frustrating millions of mobile device customers. The EU’s attempt to create a single digital mobile roaming marketplace began in 2007, but final rules are not scheduled to be in place until June 2017.

This decade-long time lag exists in spite of the EU’s own recognition that “high premiums for roaming and intra-EU calls are an excessive irritant to business and leisure customers; they are a market distortion with no rational place in a single market—they teach users to fear their phones instead of using them.”

The result of the European Parliament’s action last year finally will result in a phase-out of roaming charges. As of April 2016, there will be a regulatory cap imposed on mobile roaming charges, allowing individual EU carriers to charge only a small additional per-minute amount to domestic prices for calls, text messages and data use. By June 2017, there will be no extra roaming fee for outgoing and incoming calls, texts, or data usage. This means that users will pay the same rates outside their home country when traveling throughout the EU. National telecommunications regulators will be responsible for enforcing this regime on the carriers within their respective jurisdictions.

In contrast, the TPP seems to have absorbed the lesson that mobile roaming charge reform should not be dragged out for such an extended period of time. Upon enactment, the TPP will bind its 12 signatory countries to a common mobile roaming principle. The TPP does not mandate individual countries to regulate rates or conditions for international mobile roaming services, but if they do, the roaming rates must be the same as those charged to domestic customers.

This achieves the same outcome as the EU’s rules. In effect, a common aspect of trade agreements—most-favored nation status— has been adapted to international mobile roaming. It means that all TPP countries will receive equal trade treatment for mobile roaming, so that none are treated less advantageously than others. The TPP agreement also allows flexibility for countries that choose to allow market forces rather than government rate regulation to control roaming charges. For example, in the United States, T-Mobile’s Simple Choice Plan was launched this summer to enable unlimited data and texting, along with 20 cents-per-minute calling, for users traveling to over 140 countries.

The TPP allows for such competitive service innovation, while also requiring no discrimination when rates are regulated. It represents a sound policy approach to rein in international roaming fees. Increased demand for lower-priced mobile telecommunications services should help drive more overall trade among the TPP signatories. By doing this at the outset, the TPP’s mobile market should expand at a rapid pace.